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Round two for EU climate policy

Subjects

A reformed carbon market is the only agreed priority among European policymakers for 2030, but the transport sector will need to change as well, explains Sonja van Renssen

The message is clear and gaining in volume in Brussels: it's time to start thinking about 2030 and the next chapter in European climate policy. “For our sector 2020 is tomorrow. We need to know what the road to 2030 looks like, not just as a target, but as a package of policies,” says Jesse Scott, Head of Environment and Sustainable Development at Eurelectric, which represents European electricity companies.

Two of the EU's three headline climate policies come to an end this decade: the 20% energy-efficiency target and the 20% renewables target. Neither has a successor so far. The EU Emissions Trading Scheme (ETS) — which limits greenhouse-gas emissions from the energy and industrial sectors — carries on, but the rate at which its cap tightens will not provide an 80% emission reduction by 2050, as pledged by European leaders back in 2007. It will only get them to 70%.

This wouldn't be all that bad, but the problems besetting the EU ETS at present — still labelled Europe's flagship climate policy — are major. The carbon price has been below €10 per tonne for over a year now and coal has made a dramatic come-back, also due to its displacement in the US by shale gas. It's ironic that the world's climate leader is burning more and more of the dirtiest fuel.

There are plans afoot to 'fix' the EU ETS, and the first part — a short-term market intervention to shore up the carbon price and get it back into double figures — is in the process of being discussed by EU member states and the European Parliament. This will see the auction of 900 million carbon allowances due in 2013–15 delayed to 2019–20.

But by then, the European Commission says, the plan is to have agreed on more substantial 'structural reforms' to the EU ETS, which could include permanent cancellation of these allowances. The Commission tabled five other options for long-term reform last November1: raising the EU's emission-reduction target for 2020 from 20% to 30%; increasing the rate at which the emissions cap declines; extending the carbon market to other sectors; further restricting the use of international carbon credits; and discretionary price-management.

Non-governmental organizations want to revive the '30% by 2020' debate — scientists have said global emissions need to peak by 2015 and delayed emission cuts will only cost more2 — but the political debate in Europe is increasingly focused on 2030. “I think the chances of a structural change taking effect before 2020 are relatively limited,” says the Commission's Director-General for Climate Change, Jos Delbeke. Only a global climate deal could perhaps change the outlook for 2020.

What could be in a 2030 climate and energy package? “We think the carbon market is the way to go,” says Scott. Eurelectric wants policymakers to set a Europe-wide emission-reduction target for 2030 and then calculate what this requires in terms of an EU ETS cap. Any targets for renewables or energy efficiency should be secondary to this central pledge and driven by the carbon price, not subsidies, as is the case today.

“A new target for renewable energy would also deliver green jobs and technological innovation.”

These are not new demands. Nor is the renewable sector's counter-call for a fresh renewables target in 2030 — it is this, not the EU ETS, that has delivered Europe's emission reductions so far, they say3. A new target for renewable energy would also deliver green jobs and technological innovation. Meanwhile, energy-efficiency proponents have launched calls for a 2030 energy-efficiency target, even though the 2020 one remains non-binding.

EU policymakers insist they are keeping an open mind. The one thing they agree on is that a more robust EU ETS is crucial. There is no viable alternative to putting a price on carbon in Europe: a carbon tax is impossible because it would need unanimous agreement from 27 member states.

But the 2030 debate will be about more than the EU ETS, efficiency and renewables. The original climate and energy package also included legislation on CO2 standards for cars, fuel quality and enabling carbon capture and storage (CCS). Only the first of these is proving a success so far. Car manufacturers are well on track to meet emission limits in 2015, and EU policymakers are in the process of agreeing fresh limits for 20204,5. Proposals for what comes after should follow this year, as should plans for car CO2 labels, measuring emissions from trucks and rolling out electric-car infrastructure.

Transport remains a difficult area. The EU has halted the application of its ETS to international aviation in the hope of getting agreement on global action on this issue this autumn. Forthcoming EU proposals on shipping will probably focus on better data collection, not legislative action to combat maritime emissions. Biofuels, the main route by which fuel suppliers were planning to meet their 2020 fuel-quality target — a 6% cut in emissions compared with 2010 — face mounting questions over their climate impact.

Proposals for a new law to curb the indirect effects of land-use change from biofuel production would let fuel suppliers continue to use biodiesel up to 2020, despite studies showing it may be worse for the climate than conventional diesel6,7. Post-2020, the Commission wants Europe to move to advanced biofuels made from waste, but the policies it currently proposes to develop these fuels will not deliver, warn non-governmental organizations and industrial stakeholders such as enzyme manufacturer Novozymes. No one expects a biofuels target in a 2030 package.

Meanwhile CCS is looking less and less likely to get off the ground in Europe, with many wondering whether the EU will manage to get even one demonstration plant up and running. Financing, public acceptance and permitting problems have thrown a massive spanner in the works. Renewables, not CCS, are set to benefit from the latest pot of EU money for low-carbon innovation (€1.5 billion raised on the carbon market) because national governments cannot come up with co-financing plans for CCS.

The problem is that every single 2050 roadmap produced by the EU until now includes CCS. Even if gas replaces much of coal in future — which many predict it will — this is assumed to come equipped with CCS from 2030. Post-Fukushima, nuclear is not expected to increase its market share.

Is it time for the EU to revisit its 2050 low-carbon roadmap8 (Fig. 1)? “I would not think so,” says Delbeke. “2050 is an exercise that you have to do once in ten years to have the perspective right, but the focus for policymaking and investments now is 2030. We know the ballpark figures: we know on greenhouse-gas emissions it's around 40%, we know for renewables it's about 30%. Now we have to translate them into policy.”

Figure 1: EU greenhouse-gas emissions should fall by 80% by 2050, relative to 1990 levels, according to the European Commission's low carbon 2050 roadmap8.

EU policymakers will have to put together a package that fixes the EU ETS and perhaps complements it with renewables and efficiency targets, but also one that pursues transport emissions and recognizes new priorities such as grid development. This wasn't part of the original 2008 package, but expanded and upgraded electricity networks are essential to integrate ever larger shares of renewable energy and improve efficiency. Decarbonization may turn out to be the saviour of a long-sought-after EU internal energy market.

The 2030 climate and energy debate is kicking off against the backdrop of the Eurozone crisis, hardly ideal conditions. But if Europe is serious about decarbonization, the sooner it starts tabling concrete proposals the better.

Proposal for Regulation of the European Parliament and of the Council Amending Regulation (EC) No 443/2009 to Define the Modalities for Reaching the 2020 Target to Reduce CO2 Emissions from New Passenger Cars (EC, 2012); available via http://go.nature.com/LlX28p

Proposal for a Directive of the European Parliament and of the Council Amending Directive 98/70/EC Relating to the Quality of Petrol and Diesel Fuels and Amending Directive 2009/28/EC on the Promotion of the Use of Energy from Renewable Sources (EC, 2012); available via http://go.nature.com/tX8cQM

Bowyer, C.Anticipated Indirect Land Use Change Associated with Expanded Use of Biofuels and Bioliquids in the EU — An Analysis of the National Renewable Energy Action Plans (IEEP, 2010); available via http://go.nature.com/oOMPM3